ASU study reveals groundwater generates 43 percent of state GDP

A new study highlights the tremendous impact groundwater has on Arizona’s economy and underscores the need to make sure every community has tools to protect and manage it far into the future, said Todd Reeve, director of Business for Water Stewardship (BWS), which commissioned the report.

“Today, Arizona relies on groundwater for 40 percent of its water supply, and sustained access to groundwater remains essential for industrial, agricultural and municipal uses in Arizona,” said Reeve, whose organization currently is working with dozens of businesses across the state that are investing in and advancing solutions to make sure communities, economies and ecosystems have clean water to flourish.

BWS released the first-of-its-kind study Tuesday during a virtual event for new and returning state lawmakers who will be tasked with finding solutions to address groundwater overuse and the effects of the megadrought. The Arizona Chamber Foundation co-hosted the event.

Groundwater generated $1.2 trillion into economy from 2010 to 2018

Conducted by Arizona State University’s (ASU) Seidman Research Institute, the study calculated the economic impact of groundwater use from 2010 to 2018 in the state’s five most populous regions: Phoenix, Tucson, Prescott, Pinal County and Santa Cruz County.

According to the study, Arizona’s groundwater use was responsible for generating about $1.2 trillion into the economy during the nine-year period. When broken down on an annual basis, that amounts to approximately 43 percent of the state’s annual average GDP.

In Phoenix alone, groundwater generated $102.5 billion of average annual contribution to state GDP, supporting over one million jobs, the study states.

“These findings show just how essential groundwater is to the state’s economy,” said Tim James, director of research at the Seidman Institute. “As our state continues to grow and thrive, understanding the crucial importance of groundwater to the economy will be key in planning for the future.”

Study evaluated groundwater impact in most populous regions

The study looked at the economic impact of groundwater deliveries from 2010 to 2018 in the five most populated regions of the state that are designated as “Active Management Areas” (AMA) for water management purposes. The AMAs are regulated under the state’s Groundwater Management Act of 1980.

Among the study findings:

-Approximately 11.7 million acre feet of groundwater was used by agriculture, industrial and municipal customers during the nine-year period

-Groundwater supplies in the five AMAs contributed to annual employment of 1.4 to 1.7 million jobs, depending on the year

-More than half of the total groundwater uses, 50.1 percent, took place in the Phoenix AMA

-More than a third of the groundwater, 35.5 percent, was used in the Pinal AMA

-The Tucson AMA accounted for 11.7 percent of total groundwater used

Legislation needed to guide groundwater use statewide

While the five AMAs are regulated under the groundwater act to ensure adequate water for the future, the rest of the state is pretty much a “free for all” when it comes to tapping into aquifers, Reeve said.

Legislation will be needed to protect groundwater in these areas as well, he said. Some of the bills that have been proposed include incentives for industry, farmers, landowners and others to conserve water.

Most importantly, the rural areas of the state that rely almost entirely on groundwater will need tools to carry out conservation and water protection plans based on their local needs, he said.

Businesses are key players in protecting water

Businesses also will need to continue to invest in Arizona projects as part of the solution, Reeve said.

Major corporations like Intel Corp, Waste Management, Microsoft, Cox, Arizona Public Service, the Coca-Cola Foundation, Procter & Gamble, Reformation, Silk, and Swire Coca-Cola, USA have invested millions of dollars in recent years on conservation projects to protect communities, businesses and wildlife habitats.

That was something that was unheard of not so long ago, said Reeve, whose organization is currently working with dozens of companies on projects across Arizona.

“Ten or 20 years ago, the notion of companies investing their brand and their financial resources in projects outside of their own operations would have been unheard of,” Reeve said. “And today we’re seeing this growing commitment, especially across Arizona, in leveraging this business interest to help shore up Arizona’s water resources and create an environment where these businesses have predictable water supply and they can follow through on plans to expand, to hire and to site here in Arizona.”

Five Active Management Area results

The Seidman study analyzed the economic impact of groundwater in the five AMAs:

To read the full report, go to: The Economic Importance of Groundwater in Arizona.

Business for Water Stewardship

Business for Water Stewardship is a program of the Bonneville Environmental Foundation that helps businesses advance solutions to ensure that our communities, economies and ecosystems have enough clean water to flourish. We provide ways for businesses to actively help sustain rivers and replenish aquifers, promote forward-looking water policies, and boost their reputations as environmental stewards.

Learn more at: Business for Water Stewardship

The L. William Seidman Research Institute

The L. William Seidman Research Institute serves as a link between the local, national, and international business communities and the W. P. Carey School of Business at ASU. First established in 1985 to serve as a center for applied business research and a consultancy resource for the Arizona business community, Seidman collects, analyzes and disseminates information about local economies, benchmarks industry practices, and identifies emerging business research issues that affect productivity and competitiveness.
To read more about the work the institute is doing, go to: The L. William Seidman Research Institute